Rafale deal: India finalises 36 fighter jets with France at $8.8 billion

India and France on Friday finalised its 36 Rafale fighter jets deal. India will buy the French-made Rafale planes for $8.8 billion, according to NDTV sources.

The agreement will be signed within three weeks and will take at least 18 months for India to get the first batch of aircraft.

Prime Minister Narendra Modi on his visit to France in April 2015 had confirmed the order of 36 jet planes but could not sign the final deal due to some ‘financial’ aspects.

This agreement was among the 14 pacts signed between India and France after extensive talks between PM Modi and French President Francois Hollande on his visit to India earlier this year.

Modi had said that the financial aspects pertaining to purchase of Rafale jets will be resolving as soon as possible.

Hollande had termed the signing of the deal as a ‘decisive’ step.

As per NDTV reports, the Rafales are made by manufacturer Dassault Aviation. Sources say that as part of the government’s push to develop and support military manufacturing at home, in exchange for selling India off-the-shelf Rafales, French companies including Dassault will have to invest three billion dollars in India to help firms here with stealth-capability and radar technologies.

Government sources said that the deal has not been concluded yet but it is in “final stages”.

“The effort is to bring down the price to less than Euros 8 billion (Rs 59,000 crore),” the sources said.

Sources said the French have more or less agreed to Indian terms.

The expectation is that the final deal will be clinched by May-end.

The deal comes with the clause of delivering 50% offsets, creating business worth at least 3 billion Euros for smaller Indian companies and creating thousands of new jobs in India through the offsets.

In fact, the toughest phase in the negotiations that began in July 2015 – three months after Modi announced in Paris India’s plan to purchase 36 Rafale jets – was to get the French to agree to 50% offsets in the deal.

Initially, Dassault Aviation was willing to agree to reinvest only 30% of the value of its contract in Indian entities to meet the offset obligations.

The French side finally agreed to invest 50% of the value following a phone conversation between Modi and Hollande late last year.

The commercial negotiations, as in the pricing of the planes, equipment and other issues, actually began only in mid-January this year.

Under the proposed deal, French companies apart from Dassault Aviation, will provide several aeronautics, electronics and micro-electronics technologies to comply with the offset obligation.

Companies like Safran and Thales will join Dassault in providing state-of-art technologies in stealth, radar, thrust vectoring for missiles and materials for electronics and micro-electronics.